A new federal analysis by the Parliamentary Budget Officer predicts that Canada’s proposed cap on oil and gas emissions could come with a steep economic price, potentially cutting 40,300 jobs and shaving nearly half a percentage point off national GDP by 2032.
The proposed regulations would legally cap the industry’s emissions at 160 megatonnes between 2030 and 2032. Without additional controls, the PBO projects that upstream oil and gas operations would exceed that limit by about 7.1 megatonnes annually.
In a bid to hit the cap, oil and gas production would likely have to drop by 4.9% from projected levels, although that would still leave output more than 11% above current volumes.
While that figure may sound manageable, the PBO’s calculations suggest that cutting production even modestly could inflict considerable damage on the broader economy. In addition to the 40,300 jobs at risk, the office estimates a reduction in nominal GDP by $20.5 billion.
“To achieve the legal upper bound,” PBO’s Yves Giroux says, “we estimate that production in the upstream oil and gas sector will need to be reduced by 4.9% over 2030 to 2032 relative to projected levels in our baseline scenario.”
Conservative Party leader Pierre Poilievre highlights the report and the potential effect of the emissions cap plan on Canadian economy.
“How reckless. Right in the middle of a trade war with the U.S., Carney is attacking OUR jobs. Even as his company invests in U.S. coal,” he wrote on X. “If Carney wins, Canada loses.”
Although the report puts a sober spotlight on the economic downsides, it makes clear that climate benefits—which lie outside the PBO’s mandate—could shift the overall cost-benefit balance. The assessment also integrates up-to-date data from Environment and Climate Change Canada and the Canada Energy Regulator, signaling that earlier analyses might have underestimated how tighter limits could affect national output.
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